The bullish picture continues

The fed cattle market remained steady in January. Choice slaughter steers in the Amarillo feedlot area averaged $69/cwt., about on par with the month earlier. Feeder cattle and calves did slightly better, averaging $1.50/cwt. more than a month ago. January kicked off the year with the highest feeder price level in several years.January 1 Inventory The total number of cattle and calves in the U.S.

Advertisement

The fed cattle market remained steady in January. Choice slaughter steers in the Amarillo feedlot area averaged $69/cwt., about on par with the month earlier. Feeder cattle and calves did slightly better, averaging $1.50/cwt. more than a month ago. January kicked off the year with the highest feeder price level in several years.

January 1 Inventory The total number of cattle and calves in the U.S. as of January 1 was 98 million head. That's 1% below the 99 million head reported on Jan. 1, 1999 and 2% under the 99.7 million head of two years ago.

The two most important statistics were beef cow numbers (33.5 million) and the 5.53 million beef replacement heifers. Cows fell 1% from 1999, while replacement heifers were down only slightly. Both figures suggest a continuation of the breeding herd liquidation in 2000.

The 1999 calf crop is estimated at 38.7 million head, down slightly from 1998 and 1% lower than 1997. It suggests the same number of feeders will be available in 2000 as in 1999.

The major beef cow states are Texas (5.4 million), Missouri (2.1 million), Nebraska (2.0 million), Oklahoma (1.9 million), Montana (1.6 million), Kansas (1.5 million) and Kentucky (1.1 million). These states account for 46% of the nation's beef cows, which are located on 843,230 farms and ranches.

The cattle feeding industry has substantially increased the feeding level. On-feed statistics as of January 1 were up 7% from last year, the highest January level reported since the new series began in 1995. Placements into feedlots in December were 9% greater than a year ago and almost as large as the December 1996 level.

Cattle and calves on feed the first of this year were 11.46 million head, up over 800,000 head from 1999. The major gains were in Texas, Nebraska and Kansas.

In December, fed cattle marketings were 1.84 million head, 1% above the 1998 level. Kansas, Nebraska, Idaho, Iowa and Washington had larger marketings than a year ago, while all others had less.

Cattle and calves placed on feed in December reached 1.65 million head - 9% greater than 1999 but also 8% larger than the December 1998 level. The major increases came in Kansas, Texas, California, Colorado and Nebraska. Idaho, Iowa, New Mexico, South Dakota had fewer placements.

Placements by weight groups in December continued to emphasize lighter weight animals. Calves less than 600 lbs. were up 17% at 465,000 head, while the 600- to 699-lb. class was similar to last year. Those in the 700- to 799-lb. group (422,000 head) were up 14%, while the 800-lbs.-and-over animals grew only 6% at 261,000 head.

USDA is forecasting record beef and cattle prices in the second half of 2000. They note that retail prices for Choice beef reached $3.02/lb. in December 1999, the highest since 1993.

Increased supplies of Choice grade beef anticipated through spring will hold down further price gains. In the second half of the year, prices are expected to exceed the 1993 record of$2.95/lb.

Fed cattle prices in 1999 averaged $4/cwt. higher than in 1998. Prices in 2000 are likely to average $70/cwt., with the greatest strength expected in the fourth quarter.

Given the extremely large expansion in cattle feeding underway, it's difficult for me to assume a real reduction in feedlot marketings later in the year. With placements in 1999's final quarter up 8% over 1998, it seems certain that larger fed cattle marketings will surely come, at least by early summer.

Since January feedlot profits are also encouraging, chances are placements will stay substantial. This could tone down some of the expected price gains of the second half.